Slide 1: Second Quarter 2022 Earnings Call
Second Quarter 2022 Earnings Call John Plant: Executive Chairman and Chief Executive Officer Ken Giacobbe: EVP and Chief Financial Officer August 4, 2022
Slide 2: Important Information
Important Information Forward–Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those
Slide 3: Important Information (continued)
Important Information (continued) Non-GAAP Financial Measures Some of the information included in this presentation is derived from Howmet Aerospace’s consolidated financial information but is not presented in Howmet Aerospace’s financial statements prepared in accordance with accounting principles
Slide 4: Q2 2022 Highlights
Q2 2022 Highlights Revenue and Profitability Excluding Special Items1 Q2 2021 Q1 2022 Q2 2022 Revenue $1.195B $1.324B $1.393B Adj EBITDA1 $272M $300M $317M Adj EBITDA Margin1 22.8% 22.7% 22.8% Adj Earnings Per Share2 $0.22 $0.31 $0.35 • Revenue up 17% YoY, driven by Commercial Aerospace up 34% YoY •
Slide 5: Q2 2022 Revenue Up 17% YoY, driven by Commercial Aero Up 34% YoY
Q2 2022 Revenue Up 17% YoY, driven by Commercial Aero Up 34% YoY Revenue by Market Revenue by Market YoY Sequential (% of total) (% change) Industrial Aerospace - Commercial 34% 7% & Other 15%1 Aerospace - Defense (1%) (1%) Commercial Aerospace - Transportation Commercial Subtotal - Aerospace 22% 4%
Slide 6: Q2 2022: Adj EBITDA Margin 22.8%, Adj EPS +59%, FCF $114M, Balanced Capital Allocation
Q2 2022: Adj EBITDA Margin1 22.8%, Adj EPS2 +59%, FCF3 $114M, Balanced Capital Allocation ▪ Revenue up 17% YoY, at high end of Guidance; includes material pass through ~$60M ▪ Adj EBITDA1 of $317M, up 17% YoY, at high end of Guidance Enhanced ▪ Adj EBITDA Margin1 of 22.8%, at high end of Guidance; 2
Slide 7: Engine Products: Adj EBITDA Margin Up 360 bps YoY, driven by Narrow Body
Engine Products: Adj EBITDA Margin Up 360 bps YoY, driven by Narrow Body Revenue by Market +20% (% of total) $605M $631M $652M $599M Aerospace - Commercial $534M $544M Industrial Aerospace - Defense 3rd Party & Other 25% Industrial & Other Revenue Aerospace - Aerospace Commercial - Defense 56% 19% Q
Slide 8: Fastening Systems: Headcount Adds for Growth; Boeing 787 Production Decline
Fastening Systems: Headcount Adds for Growth; Boeing 787 Production Decline Revenue by Market +6% (% of total) $272M $262M $256M $264M $277M Aerospace - Commercial $254M Industrial Aerospace - Defense & Other Commercial Transportation 3rd Party 12% Commercial Industrial & Other Revenue Transportatio
Slide 9: Engineered Structures: Narrow Body Recovery; Boeing 787 Production Decline
Engineered Structures: Narrow Body Recovery; Boeing 787 Production Decline Revenue by Market +16% (% of total) Aerospace - Commercial $199M $190M $185M $176M $182M Industrial $160M & Other Aerospace - Defense 8% 3rd Party Industrial & Other Revenue Aerospace - Defense Aerospace - Commercial 34% 58%
Slide 10: Forged Wheels: Volumes Up 7%; Customer Supply Chain Constraints Persist
Forged Wheels: Volumes Up 7%; Customer Supply Chain Constraints Persist Revenue by Region +22% (% of total) $279M North America $229M $231M $234M $247M $227M Other 13% Europe 3rd Party North Other Revenue Europe America 55% 32% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q2 2022 YoY +7% + Commer
Slide 11: 2022 Guidance: Revenue, Adj EPS and FCF Midpoints Increased
2022 Guidance: Revenue, Adj EPS and FCF Midpoints Increased Q3 2022 Guidance FY 2022 Guidance What we expect in 2022 Low Midpoint High Low Midpoint High ▪ FY 2022 Revenue up ~14% vs. FY 2021, includes ~$200M material pass through Revenue $1.425B $1.440B $1.455B $5.645B $5.680B $5.715B ▪ FY 2022 Adj
Slide 12: Summary
Summary ▪ Revenue up 17% YoY; Adj EBITDA1 up 17% YoY; Adj Earnings Per Share2 up 59% YoY Revenue / Profit ▪ Adj EBITDA1 of $317M, at high end of Guidance with Net Headcount up ~740 sequentially from Q1 2022 Q2 2022 ▪ Adj EBITDA Margin1 22.8%, at high end of Guidance; 23.8% excluding YoY material pas
Slide 13: Howmet Aerospace Technology Day 2022
Howmet Aerospace Technology Day 2022 May 23, 2022
Slide 14: Unique Assets, Iconic Trusted Brand, Differentiated Technologies
Unique Assets, Iconic Trusted Brand, Differentiated Technologies Iconic, Differentiated Technologies Mission-Critical Supplier Trusted Brand with Rich IP Portfolio and in Growing Markets Process Know-How 80+ year history: Major presence in jet engines Leading market position: Deep customer relations
Slide 15: Four Segments: ~85% of Revenue from Number 1 or 2 Market Position
Four Segments: ~85% of Revenue from Number 1 or 2 Market Position Leading Global Provider of Advanced Engineered Solutions Engine Products Fastening Systems Engineered Structures Forged Wheels ~$2.3B 2021 Revenue ~$1.0B 2021 Revenue ~$0.7B 2021 Revenue ~$0.9B 2021 Revenue Global leader Global leader
Slide 16: Howmet Aerospace Strategy
Howmet Aerospace Strategy Focus on what we are good Prioritize major at to drive growth above differentiated products market rate for resource allocation Underpin strategy Execute a disciplined with commercial and capital allocation operational discipline strategy 16
Slide 17: Howmet Aerospace
rr) HOWMET Lw.JJ AEROSPACE
Slide 18: Appendix
Appendix FP HOWMET UILJ AEROSPACE
Slide 19: 2022 Assumptions
2022 Assumptions Full Year 2022 2022 Comments; Change versus prior Guidance • Adjusted EBITDA excluding special items Corporate Overhead ~$78M • Increased for lease costs of Corporate HQ following sale in June 2022 for $44M Depreciation and Amortization ~$270M • Excludes debt issuance, breakage and
Slide 20: Reconciliation of Net Income and Diluted EPS Excluding Special Items
Reconciliation of Net Income and Diluted EPS Excluding Special Items ($ in millions, except per-share amounts) Q2 2021 Q1 2022 Q2 2022 YTD 2022 Net income $74 $131 $147 $278 Diluted EPS $0.17 $0.31 $0.35 $0.66 Special items: Restructuring and other charges $5 $2 $6 $8 Discrete tax items(1) $4 $(2) $
Slide 21: Reconciliation of Operational Tax Rate
Reconciliation of Operational Tax Rate ($ in millions) Quarter ended June 30, 2022 Six months ended June 30, 2022 As reported Special items (1)(2) As adjusted As reported Special items (1)(2) As adjusted Income before income taxes $183 $11 $194 $354 $15 $369 Provision for income taxes $36 $9 $45 $76
Slide 22: Calculation of Segment Information
Calculation of Segment Information ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 Engine Products Third-party sales $ 534 $ 544 $ 599 $ 605 $ 2,282 $ 631 $ 652 Inter-segment sales $ 1 $ 1 $ 1 $ 1 $ 4 $ 1 $ 1 Provision for depreciation and amortization $ 31 $ 30 $ 31 $ 32 $ 1
Slide 23: Calculation of Segment Information (continued)
Calculation of Segment Information (continued) ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 Engineered Structures Third-party sales $ 176 $ 160 $ 199 $ 190 $ 725 $ 182 $ 185 Inter-segment sales $ 1 $ 2 $ 1 $ 2 $ 6 $ 1 $ 1 Provision for depreciation and amortization $ 12 $
Slide 24: Calculation of Total Segment Adjusted EBITDA and Margin
Calculation of Total Segment Adjusted EBITDA and Margin ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 Third-party sales – Engine Products $534 $544 $599 $605 $2,282 $631 $652 Third-party sales – Fastening Systems $272 $262 $254 $256 $1,044 $264 $277 Third-party sales – Engi
Slide 25: Reconciliation of Total Segment to Consolidated Totals
Reconciliation of Total Segment to Consolidated Totals Reconciliation of Total Segment Adjusted EBITDA to Consolidated Income Before Income Taxes ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 Income before income taxes $113 $110 $23 $78 $324 $171 $183 Loss on debt redemptio
Slide 26: Adjusted Corporate Expense Excluding Depreciation and Special Items
Adjusted Corporate Expense Excluding Depreciation and Special Items ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 Corporate expense $28 $10 $30 $33 $101 $22 $25 Provision for depreciation and amortization 3 2 3 1 9 1 3 Adjusted Corporate expense excluding depreciation $25 $
Slide 27: Reconciliation of Adjusted EBITDA and Margin Excluding Special Items
Reconciliation of Adjusted EBITDA and Margin Excluding Special Items ($ in millions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Q1 2022 Q2 2022 Net income $80 $74 $27 $77 $258 $131 $147 Add: Provision (benefit) for income taxes $33 $36 $(4) $1 $66 $40 $36 Other expense (income), net 4 8 1 6 19 1 (1) Lo
Slide 28: Reconciliation of Adjusted EBITDA and Margin Excluding Special Items and Material Pass Through
Reconciliation of Adjusted EBITDA and Margin Excluding Special Items and Material Pass Through ($ in millions) Q1 2022 Q2 2022 Net income $131 $147 Add: Provision for income taxes $40 $36 Other income, net 1 (1) Loss on debt redemption — 2 Interest expense, net 58 57 Restructuring and other charges
Slide 29: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow ($ in millions) Q1 2022 Q2 2022 YTD 2022 Cash provided from operations $55 $158 $213 Capital expenditures (62) (44) (106) Free cash flow $(7) $114 $107 The Accounts Receivable Securitization program remains unchanged at $250 outstanding. The proceeds from the sale of
Slide 30: Reconciliation of Net Debt
Reconciliation of Net Debt ($ in millions) June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 Short-term debt $13 $14 $5 $3 $1 Long-term debt, less amount due within one year 4,227 4,272 4,227 4,228 4,169 Total debt $4,240 $4,286 $4,232 $4,231 $4,170 Less: Cash, cash equ
Slide 31: Reconciliation of Net Debt to Adjusted EBITDA Excluding Special Items
Reconciliation of Net Debt to Adjusted EBITDA Excluding Special Items ($ in millions) Trailing-12 months ended March 31, 2022 June 30, 2022 Net income $ 309 $ 382 Add: Provision for income taxes $ 73 $ 73 Other expense, net 16 7 Loss on debt redemption 146 125 Interest expense, net 245 236 Restructu
Slide 32: Calculation of Segment Markets Revenue
Calculation of Segment Markets Revenue Engine Fastening Engineered Forged ($ in millions) Products Systems Structures Wheels Total Segment Second quarter ended June 30, 2021 Aerospace - Commercial $260 $129 $79 $— $468 Aerospace - Defense $121 $41 $64 $— $226 Commercial Transportation $— $49 $— $229
Slide 33: Howmet Aerospace
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